The power of attorney dilemma: Pros and cons of putting
someone else in charge

Wednesday 27th September, 2017

Putting someone else in the driving seat of your financial
or medical decisions can be a daunting decision. As our capacity to deal with
forms, telephone calls and visits to the high street reduces, our reliance on
others increases, but when is the right time to hand over power? Here’s what
you need to know about power of attorney.

What is power of attorney?

The power of attorney is essentially your permission for
another person to act on your behalf in serious situations where normally only
you would be able to deal with the issue. It takes the form of a legal
document, which you put together and sign, giving that individual the rights to
attend to certain matters on your behalf.

A power of attorney doesn’t have to be a permanent decision.
Sometimes it can be helpful to have someone dealing with a particular situation
for you, but for other issues you’d rather stay in control. For example, if you
were in hospital and needed a friend or relative to pay your bills for you, you
could grant temporary power of attorney to them to ensure these things are
done.

Alternatively, you can grant a more permanent power of attorney.
This enables a friend or relative to act on your behalf for the rest of your
life, and can be a great decision if you are diagnosed with a degenerative
disease such as dementia.

Types of power of attorney

There are three main types of power of attorney, each of
which may be useful to you in different situations.

Ordinary
power of attorney: This allows one or more people, who will be known as
your attorney, to make financial decisions for you. This type of agreement is
only valid while you have mental capacity to make your own decisions, so it is
best for people who are temporarily in hospital, can no longer get to the bank
or post office, or physically struggle to complete necessary paperwork.

Lasting
power of attorney: Lasting power of attorney gives someone you trust the
right to make decisions on your behalf if you are unable to make those
decisions yourself. This can be for financial reasons, such as selling your
home, investing savings or paying bills. It can also be for care and health
purposes, such as what medical care you receive, where you live and how you
spend your time.

Enduring
power of attorney: Today, there is no longer such a thing as an enduring
power of attorney, as these were replaced with lasting power of attorney in
October 2007. However, if you signed an enduring power of attorney agreement
prior to this date, it will still be valid. Enduring power of attorney only
covers financials, so if you want your attorney to deal with healthcare
decisions too, it can be a good idea to set up a lasting power of attorney to
work alongside your existing enduring power of attorney.

Understanding the types of power of attorney available to
you is the first step towards deciding if it’s right for you to put this
agreement in place.

Pros and cons of power of attorney

There is no hard and fast rule about when you should
implement a power of attorney agreement. It’s very much an individual decision,
and one you should consider carefully.
There are a lot of advantages to setting up a power of attorney agreement,
including:

• It’s inexpensive

• You’ll feel more certain of the future

• You can still retain ultimate control if you
wish

• You get to choose who is your attorney

It’s also worth weighing up the disadvantages too. A power
of attorney will only end upon your death, so it’s a decision you’ll have to
live with for the rest of your life. Think about things like:

• Whether the person you choose is competent

• Whether they are trustworthy and willing to help

• If all your financial institutions are going to
recognise the power of attorney

• What you will do if something goes wrong

For most situations, appointing a power of attorney is
nothing to be afraid of. In fact, the process can be liberating. It’s easy to
assume that if our mental capacity fails us our affairs will be handled by our
wife or husband, son or daughter, but in actual fact, without a power of
attorney drawn up, they may well not be. Consider your options, and do your
homework on the pros and cons of power of attorney, because it could be the
best decision you ever made.

Don’t forget, you can contact us for more
information and our team can point you in the direction of independent
financial advisors.

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The power of attorney dilemma: Pros and cons of putting
someone else in charge